Banks Increasing Their Investment In Innovation As A Response To Fintech Threat

Sensing that the threat of industry disruption in retail banking is growing, 84 percent of banks are increasing their innovation investment. The 7th Annual Innovation in Retail Banking Report from Efma and Infosys Finacle reveals that banks expect mobility (59%), advanced analytics/big data (57%), open APIs (53%) and the Internet of Things (47%) to have a significant impact on the industry. Banks envision startups having the biggest impact in P2P payments and digital marketing. The number of banks with an innovation strategy has increased from 37 percent in 2009 to 73 percent today:

As customers increasingly switch from using branches and call centers to using digital channels, Gallup observes that banks will still need to ensure they're offering engaging customer experiences in every channel.

Banks must adapt to Millennial demands by thinking branchless, offering innovative products that meet their needs (e.g., alternative lenders that have offered ways to refinance student loans), establishing convenience and personalizing experiences. Writing for the Financial Brand, Vincent Molinari stresses that digital delivery will be paramount and that banks and credit unions that don't develop better online and mobile programs will see their businesses steadily erode. "As Millennials gain more capital and economic influence, they expect banking providers will respond to their preferences and lifestyles. Instead of investing millions into building inviting brick-and-mortar branches, banks should create more robust, personalized, and customizable digital experiences," writes Molinari.